Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?
Private sugar processors in Andhra Pradesh, India use an unusual form of vertical coordination. They issue ‘permits’ to selected cane growers a few weeks before harvest. These permits specify the amount of cane to be delivered during a narrow time period. This article investigates why processors cre...
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Published by Oxford University Press on behalf of the World Bank
2017
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| Online Access: | http://hdl.handle.net/10986/27689 |
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okr-10986-276892021-04-23T14:04:46Z Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts? Patlolla, Sandhyarani Goodhue, Rachael E. Sexton, Richard J. SUGARCANE SUGAR QUALITY VERTICAL COORDINATION PRODUCTION CONTRACTS MARKETING PERMITS Private sugar processors in Andhra Pradesh, India use an unusual form of vertical coordination. They issue ‘permits’ to selected cane growers a few weeks before harvest. These permits specify the amount of cane to be delivered during a narrow time period. This article investigates why processors create uncertainty among farmers using ex post permits instead of ex ante production contracts. The theoretical model predicts that ex post permits are more profitable than ex ante contracts or the spot market under existing government regulations in the sugar sector, which include a binding price floor for cane and the designation of a reserve area for each processor wherein it has a legal monopsony for cane. The use of ex post permits creates competition among farmers to increase cane quality, which increases processor profits and farmer costs. Empirical analysis supports the hypothesis that farmers operating in private factory areas have higher unit production costs than do their counterparts who patronize cooperatives. 2017-08-09T20:03:32Z 2017-08-09T20:03:32Z 2015-09-29 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/27689 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Published by Oxford University Press on behalf of the World Bank Publications & Research :: Journal Article Publications & Research South Asia India |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
en_US |
| topic |
SUGARCANE SUGAR QUALITY VERTICAL COORDINATION PRODUCTION CONTRACTS MARKETING PERMITS |
| spellingShingle |
SUGARCANE SUGAR QUALITY VERTICAL COORDINATION PRODUCTION CONTRACTS MARKETING PERMITS Patlolla, Sandhyarani Goodhue, Rachael E. Sexton, Richard J. Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts? |
| geographic_facet |
South Asia India |
| description |
Private sugar processors in Andhra Pradesh, India use an unusual form of vertical coordination. They issue ‘permits’ to selected cane growers a few weeks before harvest. These permits specify the amount of cane to be delivered during a narrow time period. This article investigates why processors create uncertainty among farmers using ex post permits instead of ex ante production contracts. The theoretical model predicts that ex post permits are more profitable than ex ante contracts or the spot market under existing government regulations in the sugar sector, which include a binding price floor for cane and the designation of a reserve area for each processor wherein it has a legal monopsony for cane. The use of ex post permits creates competition among farmers to increase cane quality, which increases processor profits and farmer costs. Empirical analysis supports the hypothesis that farmers operating in private factory areas have higher unit production costs than do their counterparts who patronize cooperatives. |
| format |
Journal Article |
| author |
Patlolla, Sandhyarani Goodhue, Rachael E. Sexton, Richard J. |
| author_facet |
Patlolla, Sandhyarani Goodhue, Rachael E. Sexton, Richard J. |
| author_sort |
Patlolla, Sandhyarani |
| title |
Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts? |
| title_short |
Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts? |
| title_full |
Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts? |
| title_fullStr |
Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts? |
| title_full_unstemmed |
Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts? |
| title_sort |
managing quantity, quality, and timing in indian cane sugar production : ex post marketing permits or ex ante production contracts? |
| publisher |
Published by Oxford University Press on behalf of the World Bank |
| publishDate |
2017 |
| url |
http://hdl.handle.net/10986/27689 |
| _version_ |
1764465899704680448 |